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he asks. . . Maybe this obscure hedge fund had a plan. "The question is, will local communities decide that this is an important issue, that it's worth saving these newspapers, protecting them from firms like Alden, or will they decide that they don't really care?" But he couldnt help feeling that the police scandal would have been exposed much sooner if the Sun were operating at full force. [8][24] Tribune Publishing publishes nine major metropolitan dailies. ), Crucially, the profits generated by Aldens newspapers did not go toward rebuilding newsrooms. What most concerns him is how his city will manage without a robust paper keeping tabs on the people in charge. One tagline he was considering was Marylands Best Newsroom., When I asked, half in jest, if he planned to raid the Sun to staff up, he responded with a muted grin. Gerry Smith. A look at Alden Global Capital is the cover story of the latest . This was the core of Freemans argument. [15][16] In March 2018, Margaret Sullivan, the media columnist for The Washington Post, called Alden "one of the most ruthless of the corporate strip-miners seemingly intent on destroying local journalism. The New York-based hedge fund Alden Global Capital - known for slashing its newspapers' budgets to extract escalated profits - won shareholder approval Friday for its $633 million bid to acquire the Tribune Publishing newspaper chain.. The scene was somehow even grimmer than Id imagined. It was founded in 2007 by Randall D. Smith. A native of Vallejo, he was proud to work for his hometown paper. They are also defined by an obsessive secrecy. In truth, Freeman didnt seem particularly interested in defending Aldens reputation. Another ex-publisher told me Freeman believed that local newspapers should be treated like any other commodity in an extractive business. At the Pioneer Press , where its staff is down to 60, the paper produced a . MediaNews Group came out of bankruptcy in March 2010 under the majority ownership of its lenders. [2] Its managing director is Heath Freeman. It was all about the next quarters profit margins, says Matt DeRienzo, who worked as a publisher for Aldens Connecticut newspapers before finally resigning. They want to know who exactly profits when we learn, as Harvard Nieman Labs Ken Doctor recently reported, that the firm netted $160 million last year from its Digital First Media newspapers. What happens next? But within weeks, Bainum said, Alden tried to tack on a five-year licensing deal that would have cost him tens of millions more. How exactly Randall Smith chose Heath Freeman as his protg is a matter of speculation among those who have worked for the two of them. What exactly went wrong would become a point of bitter debate among the journalists involved in the campaigns. Have you heard of the hedge fund Alden Global Capital? Theyre being targeted by investors who have figured out how to get rich by strip-mining local-news outfits. How do you know who wins? the boy asks. Two days after the deal was finalized, Alden announced an aggressive round of buyouts. 'Vulture' Fund Alden Global, Known For Slashing Newsrooms, Buys Tribune Papers, Stop The Presses! Freeman was clearly aware of his reputation for ruthlessness, but he seemed to regard Aldens commitment to cost-cutting as a badge of honorthe thing that distinguished him from the saps and cowards who made up Americas previous generation of newspaper owners. The newspaper lost a quarter of its staff to buyouts after it was acquired by Alden Global Capital in May. This is the story weve been telling for decades about the dying local-news industry, and its not without truth. For those who cared about the future of local news, it was hard to imagine a better outcomewhich made it all the more devastating when the bid fell through. In May 2021, Tribune Publishing finalized its sale to Alden, after having announced in February 2021 that it intended to pursue this path. To be sure, the Knight Foundation does much to help promote and sustain local news. In early 2011, Alden was still considered a non-controlling investor, but by the end of the year, that would change. Read: What we lost when Gannett came to town. By 2011, when Aldens Distressed Opportunities Fund lost more than 20 percent of its value, Knights holdings in the fund were valued at $10.7 million. But I had underestimated how little Aldens founders care about their standing in the journalism world. Read: Local news is dying, and Americans have no idea, From 2015 to 2017, he presided over staff reductions of 36 percent across Aldens newspapers, according to an analysis by the NewsGuild (a union that also represents employees of The Atlantic). The Tribune Company (which owns the newspapers mentioned above) was still turning a profit when Alden bought it, but the hedge fund immediately offered aggressive rounds of buyouts and shrunk its newsrooms in the name of increasing profit margins. Hedge fund Alden Global Capital, one of the country's largest newspaper owners with a reputation for intense cost cuts and layoffs, has offered to buy the local newspaper chain Lee Enterprises for about $141 million. When he did, he exhibited a casual contempt for the journalists who worked there. But it turned out that Smith had so many doorsteps16 mansions in Palm Beach alone, as of a few years ago, some of them behind gatesthat the plan proved impractical. (Freeman has, in the past, disputed Bainums account of the negotiations.) The firm has a history of purchasing newspapers to cut costs wherever . Over the course of seven years, Alden doubled profits in its Bay Area News Group newspapers, another home to cutbacks. [10] With its acquisition of Tribune Publishing in late May 2021, Alden is collectively the second-largest owner of newspapers in the United States, as calculated by average daily print circulation, second only to Gannett. When it was over, a quarter of the newsroom was gone. | Michael Gray, WIkimedia Commons. And everyone knows its going to run dry.. Freemans father, Brian, was a successful investment banker who specialized in making deals on behalf of labor unions. But for all the theatrics, his marching orders were always the same: Cut more. [32], The company has been criticized for investing money for pensions of newspaper employees in funds it manages itself. Alden Global Capital, the New York hedge fund that bought Tribune Publishing this year, said on Monday that it was making an offer for another big American newspaper chain, Lee . From the March 1914 issue: H. L. Mencken on newspaper morals, A story circulated throughout the companypossibly apocryphal, though no one could say for surethat when Freeman was informed that The Denver Post had won a Pulitzer in 2013, his first response was: Does that come with any money?. Now he was feeling the effects of their management. [6][7][8][9], The company operates its media holdings through Digital First Media (DFM), which it acquired in 2010 after DMG's parent company, MediaNews Group, declared bankruptcy. To David Simon, the whimpering end of The Baltimore Sun feels both inevitable and infuriating. Meanwhile, reporters fanned out across their respective cities in search of benevolent rich people to buy their newspapers. It wasn't the first newspaper acquisition for this hedge fund firm, nor is it the only firm of its kind eyeing the nation's newspapers. But the group that jumps out to me on the list is the John S. and James L. Knight Foundation. The $633 million sale made Alden the nation's second largest newspaper owner in terms of circulation, with more than 200 newspapers. It . Instead, the money was used to finance the hedge funds other ventures. After a contentious presidential race and amid a still-raging pandemic, there was a limited supply of outrage and sympathy to spare for local reporters. He used his own money to pull court records, and went years without going on a vacation. Longtime Tribune staffers had seen their share of bad corporate overlords, but this felt more calculated, more sinister. That's because the fund is stepping in to buy and then gut newsrooms across the country. [12] Lee owns daily newspapers in 77 markets in 26 states, and about 350 weekly and specialty publications. The paper had weathered a decade and a half of mismanagement and declining revenues and layoffs, and had finally achieved a kind of stability. Since Alden's . Baltimore has always had its problems, he told me. To industry observers, Aldens brazen model set it apart even from chains like Gannett, known for its aggressive cost-cutting. Chicago-based Tribune Publishing on Tuesday announced a proposed sale to hedge fund Alden Global Capital in a deal valued at $630 million. Most of his investments are defined by a cold pragmatism, but he takes a more personal interest in the media sector. John Temple: My newspaper died 10 years ago. Hes acutely aware of the risksI may end up with egg on my face, he saidbut he believes its worth trying to develop a successful model that could be replicated in other markets. In the past 15 years, more than a quarter of American newspapers have gone out of business. He told me it will begin with an annual operating budget of $15 million, unprecedented for an outfit of this kind. In budget meetings, according to the former executive, Freeman hectored local publishers, demanding that they produce detailed numbers off the top of their head and then humiliating them when they couldnt. Freeman was more animated when he turned to the prospect of extracting money from Big Tech. Well, he told me, they have some very good reporters., This article appears in the November 2021 print edition with the headline The Men Who Are Killing Americas Newspapers., A Secretive Hedge Fund Is Gutting Newsrooms, I Dont Know That I Would Even Call It Meth Anymore, W. G. Sebald Ransacked Jewish Lives for His Fictions. So I was more than a little shocked to learn that, according to its tax filings, Knight had invested $13 million with Aldens Distressed Opportunities Fund by 2010 and kept investing through 2014. Like many alumni of the Sun, Simon is steeped in the papers history. You need real capital to move the needle, he told me. We dont hear from them Theyre, like, nameless, faceless people., In the months that followed, the Sun did not immediately experience the same deep staff cuts that other papers did. When the sale failed to attract a sufficiently high offer, Freeman turned his attention to squeezing as much cash out of the newspapers as possible. On Monday, Dail At one point, I tracked down the photographer whod taken the only existing picture of Smith on the internet. At the time, even savvy media insiders like Martin Langeveld wistfully predicted Alden would keep newspapers future in mind: Smith knows that the only way to win his big bet on the future of newspapers is to turn them into nimble, modern digital news enterprises.. Baltimore is an underdog town, Liz Bowie, a Sun reporter who was at the meeting, told me. This is predatory.. [33], Alden Global Capital's management of American newspapers has been criticized. [4][5] The company added more newspapers to its portfolio in May 2021 when it purchased Tribune Publishing and became the second-largest newspaper publisher in the United States. In February 2021, he announced a handshake deal to buy the Sun from Alden for $65 million once it acquired Tribune Publishing. The Tampa Bay Times has sold its printing plant at 1301 34th St. N to a real estate arm of Alden Global Capital, a New York hedge fund that is the second-largest newspaper owner in the country. Most responded with variations on the same question: Which recent stories from your newspapers have you especially appreciated? NPR's A Martnez talks to McKay Coppins of The Atlantic about how a hedge fund, Alden Global Capital, is buying and then gutting newspapers and the implications for democracy. Its a hedge that went and bought up some titles that it milks for cash.. Im repulsed by the incestuous world of New York journalism, he tells New York magazine. Feeling burned by the hedge fund, Bainum decided to make a last-minute bid for all of Tribune Publishings newspapers, pledging to line up responsible buyers in each market.